Malaysia Foils Smuggling of 30 AI Servers Worth 50 Million Ringgit

The Royal Malaysian Customs Department announced the seizure of 30 servers equipped with advanced artificial intelligence chips, in a suspected violation of export controls. Officials believe a syndicate is using Malaysia as a transit point to re-export the chips to another Asian country.

The shipment, valued at around 50 million ringgit ($12.2 million), was intercepted in the free commercial zone at the main airport during an inspection on October 15. Airport Customs Director Aspalila Ag Tuah said the servers arrived from an Asian country and were falsely declared as electrical components to avoid detection before being re-exported to another Asian country without the required permit.

Last year, Malaysia imposed licensing requirements for the export, transit, and transshipment of high-performance US-origin AI chips, under pressure from Washington to prevent sensitive technologies from being rerouted to China via third countries. The United States seeks to restrict China's access to advanced semiconductors to curb Beijing's capabilities in artificial intelligence and the military sector.

Aspalila said the shipment is believed to be linked to a syndicate behind five smuggling attempts, including an incident in June when authorities seized 72 servers containing advanced AI chips in the same free commercial zone. She explained that a Malaysian company that facilitated the shipment was summoned to assist in the investigation, and declined to disclose the origin of the chips or their final destination as investigations are ongoing.

What do these terms mean?

Export Controls: Government rules specifying the goods and technologies that require a license before being sold or transferred to specific countries or parties.

Transshipment: Transferring a shipment from one vessel or aircraft to another mode of transport at an intermediate port or airport before continuing its journey to the final destination.

Free Commercial Zone: An area within a port or airport where goods are exempt from certain customs duties until they enter the local market or are re-exported.